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THE UNIVERSITY OF NEW SOUTH WALES

Australian School of Business

School of Accounting ACCT 1501: Accounting and Financial Management 1A Week 1

Introduction to Financial Accounting & Key Financial Statements Student Handout

Lecturer: Dr. Youngdeok Lim School of Accounting UNSW QUAD 3069 youngdeok.lim@unsw.edu.au

Blackboard: http://telt.unsw.edu.au.

Session 1, 2013

WEEK 1: Introduction to Financial Accounting & Key Financial Statements Welcome to Accounting and Financial Management 1A. In this first lecture you will be introduced to the lecture staff on the course and be given the Course Outline. We will be outlining the objectives of the subject, its structure and requirements as described in the Course Outline and answer any questions you may have about the course. We will be referring to the Woolworths 2011 Annual Report throughout the course. The annual report is included as an appendix in your course textbook (5th edition, Trotman Gibbons & Carson, pages 746787). We will then begin to explore the nature of accounting and introduce general purpose financial reports.

Learning objectives
At the end of this topic you will be able to: Understand the overall course requirements and assessment tasks for this unit. Define Accounting Begin to become familiar with the Woolworths 2011 annual report and the information it contains. Be aware of key financial statements and the users of these reports. Understand the foundations of modern accounting practices including the underlying assumptions of financial reporting Begin to understand the accrual concept

Required Reading
1. ACCT 1501, S1 2013 Course Outline 2. Trotman, Gibbins & Carson Chapter 1 3. Woolworths 2011 Annual Report (familiarise yourself with the contents) (Appendix 1)

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Tutorial Questions – Week 2

Preparation Questions You should attempt these questions before the tutorial. The answers to the preparation questions will be made available on the course website at the end of the relevant lecture week. In this way you can check your understanding of these questions before the tutorial class. You are welcome to raise any unresolved issues that you have with the preparation questions with your tutor. This will be important and essential information for you when you complete your reflection task. • • • DQ 1.1, 1.2, 1.3, 1.7 P1.6, P1.16 Case 1A

Tutorial Questions The answers to tutorial questions are the focus of the tutorial class work: • • DQ 1.12, 1.16 P1.7, P1.18, P1.24

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ABC faced insolvency in 2007
Colin Kruger May 22, 2010 ABC Learning was staring down the barrel of a $1.78 billion loss for the 2008 financial year when it collapsed, but the company may have been insolvent as early as mid-2007, according to a report from its administrators, led by Ferrier Hodgson's Greg Moloney. In the final drafts of ABC's financial statements prepared for the year ending June 30, 2008, its auditors included impairment charges totalling $1.168 billion, and a $364 million loss on the disposal of a majority stake in ABC's US business. Significant contributors to the loss - $1.2 billion more than previous estimates - are a $686 million cut in the valuation of childcare licences and a $127 million write-down of debts owed by ABC's childcare developer, 123 Group. The massive loss means the net assets on ABC's balance sheet were reduced from $2.22 billion the previous year to just $284.5 million at June 30, 2008, putting the company in breach of its covenants almost five months before administrators were appointed. But the bombshell in the report to creditors is the administrators' analysis that for the 2007 and 2008 financial years ABC had just 30¢ and 40¢, respectively, of current assets for every dollar of current liabilities. This equates to a current ratio of 0.3 and 0.4 for those years. The administrator's report notes that ''a current ratio and quick ratio less than one may indicate a potential liquidity crisis''....
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